Murphy v State of Victoria & Anor [2014] VSCA 236

1 Over the last three days, we have listened to very detailed and careful arguments by counsel for all parties in support of and in opposition to the appeal which is now before us. Given the nature and complexity of the argument we propose to reserve our decision.

2 Pending our determination of the matter, however, the appellant seeks an interim injunction[1] to restrain the respondents proceeding further with the motorway project the subject of the appeal, and in particular to restrain the Crown in right of the State of Victoria from entering into a contract with the successful tenderer for the construction of the motorway as a tollway in public private partnership. The exact terms of the relief sought are as follows:

The respondents be restrained from entering into any contract for the design, funding, developing, procuring or construction of the East West Link (Eastern Section) Project (Project), with the East West Connect consortium, the preferred bidder for the Project or with any other bidder for the Project.

The respondents be restrained from compulsorily acquiring any of the properties the subject of a notice of intention to compulsorily acquire given.

3 Counsel for the appellant described the injunction which he seeks as a 'Paringa situation', by which we take him to mean an injunction of the kind which the High Court granted in order to preserve the subject matter of the appeal in Paringa Mining & Exploration Company Plc v North Flinders Mines Ltd.[2] Of course, the circumstances in Paringa were very different to those in this case. In Paringa, both the judge at first instance and Full Court of the Supreme Court of South Australia refused to hear the applicant. In this case, we have been listening to argument for the better part of the last three days and a substantial part of the last of those has been devoted to this application.

4 The application is opposed on the basis that, even if the appellant is wholly successful in the appeal and, on remitter to the Trial Division, is successful in his claim, he will not be entitled to an injunction to restrain the State proceeding with the project, still less to restrain the State from compulsorily acquiring properties.[3] Further or alternatively, based on four affidavits filed in opposition to the application,[4] including one confidential affidavit in which the amounts of money involved are disclosed, it is submitted that the loss and damage which the respondents would suffer if the project were restrained would be or be likely to be so great that the balance of convenience is plainly against the grant of injunction. The respondents, however, are agreeable to a restraint until 10.00 am on Monday 29 September 2014 if it assists to resolve the matter.

5 In our view, it is not appropriate to grant the injunction which is sought for any longer period than until next Monday at 10.00 am. As French J observed in ACCC v Real Estate Institute,[5] injunction will not go under s 80 of the Trade Practices Act 1974[6] in relation to allegedly misleading and deceptive conduct unless there is sufficient relevant connexion between the impugned conduct and the injunction sought to be granted; and the determination of whether there is a sufficient relevant connection involves an evaluative judgment. As matters stand in our evaluative judgment, there is very little chance of the appellant establishing sufficient relevant connexion to warrant final injunctive relief of the kind which he seeks.

6 We assume for the sake of argument that the appellant will succeed in the appeal and, on remitter to the Trial Division, will succeed in establishing the misleading and deceptive conduct which he alleges. We also assume for the sake of argument, as we were asked to do by counsel for the appellant, that the impugned representations will be found to be egregiously misleading in the sense that the impugned representations were not only not based on reasonable grounds but were without any basis (as is said to be demonstrated by the expert report of William McDougall which was tendered in support of the application).

7 The difficulty, however, as we see it, is that the preferred tenderer has not been misled by any of the impugned representations - to the contrary, it says that it knows all of the facts - and by its counsel, who was given leave to appear as representing a party likely to be affected by the injunction, has opposed the grant of injunction for anything longer than a few days.

8 Counsel for the appellant submitted that the decision of the High Court in Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd[7] established that injunction would go at the suit of any person under s 80 of the Trade Practices Act; and thus, counsel submitted, it was distinctly possible that, if the appellant succeeds in his claim, injunction will go at his suit under s 232 of the ACL. Especially is that so, counsel said, where it is at least arguable, and for the purposes of this application it ought be assumed, that s 18 of the ACL establishes a new norm of honest dealing calculated to afford appropriate remedies against the consequences of misleading and deceptive conduct in the course of any of the broad range of business and professional activities now expressly identified by the definition of 'trade and commerce' in s 2 of the legislation.

9 After all, in counsel's submission, if the respondents were a private organization which had put out a prospectus containing misleading and deceptive representations akin to the impugned representations, it surely could not be doubted that injunction would go to restrain that organization from receiving subscriptions from investors until and unless the prospectus were rectified. Similarly, counsel argued, it should not be doubted that injunction may go against the respondents to restrain them from giving effect to the project until and unless the impugned representations have been rectified.

10 Alternatively, counsel contended, even if that were thought to be a doubtful proposition, the minority decision of Kirby P in Wickstead v Browne,[8] which was vindicated on appeal to the High Court, showed the unwisdom of shutting out the appellant from his chance of obtaining the form of final relief which he seeks on the basis of all of the evidence which will emerge and such facts as may be found in the course of the trial.

11 We acknowledge that there is some force in those submissions. Many of the arguments advanced over the last three days are novel, and raise questions of statutory construction which are yet to be authoritatively determined. Equally, in all probability, we are not in as good a position to evaluate the sufficiency of connection between the impugned conduct and the sought for final relief as the trial judge may be following trial or even as such judge as may be appointed to hear and determine an application for interlocutory injunction in the event that the appeal succeeds and the matter is remitted for trial.

12 At the same time, however, there are significant considerations which point in the opposite direction. First, Truth About Motorways, was pre-eminently about standing, as opposed to remedies, and as Gleeson CJ and McHugh J took care to make clear[9] by reference to Bowen CJ's judgment in Phelps v Western Mining Corp Ltd,[10] one thing is by no means the same as the other.

13 Secondly, even if s 18 of the ACL establishes a new norm of honest dealing applicable to all forms of commercial and professional activities, it is not lightly to be supposed that it is directed to protecting any broader class of persons than those who do or may act to their detriment in reliance upon misleading or deceptive conduct or who may be affected directly or indirectly by those who do or may so act.

14 Thirdly, even if it is intended that the suggested norm of honest dealing has the object or effect of affording relief to a wider class of persons than that, there remains the need for the appellant to establish sufficient relevant connexion between the impugned conduct and the remedy which is sought, and thus sufficient relevant connexion between the impugned conduct and the prevention or eradication of the harm to which the remedy is directed. In this case, any connexion between the impugned conduct and such harm as it is alleged might be suffered by reason of the construction of the motorway is at best fortuitous and logically very tenuous.

15 Perhaps it may be, as counsel for the appellant contended, that, if the State were forced to publish corrective advertising before entering into a contact with the successful tenderer, the motorway might never be built. The delay and expense which would be involved in putting out corrective advertising, the loss to the State and the successful tenderer as a result of being delayed, the imminence of the coming State election, and the change in government policy which might result from it, imply the possibility that the grant of interim injunction would have that effect.

16 In our view, however, it cannot be that the ACL's conception of public interest protection goes as far as that. To grant an injunction to achieve that consequence, rather than to preserve interests which the legislation was designed to protect, would be an abuse of the legislation.

17 So to say is not intended to exclude the possibility of the appellant succeeding in obtaining the final relief which he seeks. On one view of the matter, the chance of establishing sufficient relevant connexion between the impugned conduct and the relief which is sought cannot be excluded unless and until there has been discovery and a final determination of the matters in issue on a conventional and regular basis. Nothing which we say in these reasons is intended to foreclose the issue if the matter is remitted for trial.

18 It is, however, plain from the affidavit material filed on behalf of the respondents that an injunction in the terms sought by the appellant (for anything longer than a few days) would be likely to have profound consequences. They include:

(a) If the contracts are signed after 1 October 2014, the State will assume foreign exchange risk in relation to approximately 100 million Euros.[11]

(b) The pricing given by the preferred tenderer and financiers is only open until 5 December 2014.[12] After that date, it will be necessary to renegotiate, which carries with it the real risk of an increase in the construction cost and the costs of finance.[13] The risk is enlivened if the contracts are not signed by the commencement of the caretaker period on 4 November 2014.[14]

(c) Service charges to be paid under the Project agreement are not yet fixed, and will not be fixed until after the contracts are signed and other conditions met. Until they are fixed, the State bears the risk of interest rate fluctuations.[15] A one per cent increase in interest rates prior to signing of the contracts would cost the State $130 million in net present value terms.[16]

19 Consequently, any undertaking as to damages given by a person of ordinary means (as we infer from the material the appellant to be) would be of little value unless such undertaking were secured. Although the appellant has offered an undertaking as to damages, the undertaking offered is not secured and, in the event of any substantial damage being suffered, could not in reality be called upon by the Court or those affected by its operation in any meaningful way.

20 Finally, with reference to Paringa,[17] it remains to observe that, although refusal of the interim relief which is sought is likely to mean that the appellant will be denied a chance of obtaining final relief to restrain the State from proceeding with the contract for construction of the motorway (because the contract will by then have been entered into), it does not follow that refusal of interim relief will render the proceeding wholly nugatory. The appellant seeks declaratory and other relief as well as injunction, which we assume would include corrective advertising, and there is no reason why that would not be available if the appellant were to succeed in his claim.

21 In the result, based on our consideration of the matter during the last three days' hearing, and assuming in the appellant's favour that he succeeds in the appeal on the basis of the procedural issues argued before us, and that he thereafter succeeds at trial in establishing actionable misleading or deceptive conduct of the kind alleged, we are not persuaded that the appellant's prospects of obtaining final relief of the kind claimed in paragraphs B(b) and B(c) of the prayer for relief in the appellant's Further Amended Statement of Claim, in circumstances where the undertaking as to damages is not secured and would not likely be of any significant value, are sufficiently strong to justify the granting an interim injunction in the terms which are sought.

22 Accordingly, we are not persuaded that the justice of the case suggests that an injunction of the kind sought by the appellant should be granted beyond 10.00 am next Monday 29 September 2014.

24 Upon the State by senior counsel giving an assurance to the Court in the terms announced, the appellant's amended summons dated 19 September 2014 is dismissed.

[1] By way of amended summons dated 19 September 2014.

[2] [1988] HCA 53; (1988) 165 CLR 452 ('Paringa').

[3] Cf Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199, 216 [8], (Gleeson CJ).

[4] Affidavit of David James Webster sworn 22 September 2014; Affidavit of Janine Margaret Hebiton sworn 22 September 2014; Affidavit of Aneetha De Silva sworn 21 September 2014; and Confidential Affidavit of Aneetha De Silva sworn 21 September 2014.

[5] [1999] FCA 18; (1999) 95 FCR 114, 132 [39].

[6] Now, s 232 of the Australian Consumer Law ('ACL').

[7] [2000] HCA 11; (2000) 200 CLR 591 ('Truth about Motorways').

[8] (1992) 30 NSWLR 1.

[9] [2000] HCA 11; (2000) 200 CLR 591, 601 [14].

[10] (1978) 33 FLR 327, 331-332, (1978) 20 ALR 183, 187-188.

[14] Webster affidavit, [11] and [13]; Hebiton affidavit, [37].

[17] [1988] HCA 53; (1988) 165 CLR 452, 460.